Autoworkers Adjust to Job Banks’ End as GM, Ford Try to Rebound

UAW President Bob King said that he’ll seek to win back benefits and rebuild the union’s power when contract negotiations begin next year. Photographer: Jeff Kowalsky/Bloomberg

Aug. 26 (Bloomberg) -- General Motors Co. gave Kevin Dorey’s
father a paycheck for 34 years, kept him working near home and
let him out in time for his kids’ football games.

“‘It’s steady’ -- that’s what my dad always told me about
General Motors,” Dorey, 44, said over chicken wings and beer at
the Beef ‘O’ Brady’s sports bar in his hometown of Saginaw
Township, Michigan. “For me, it’s been anything but steady.”

Kevin Dorey worked at three plants in three years until his
most recent location in Orion Township, Michigan, which required
a 90-minute commute, closed in November. Previously, he would
have received full pay during the layoff while GM revamped the
factory for a new car. The United Auto Workers agreed last year
to give up that benefit, known as the jobs bank, and the
paychecks stopped coming in July.

Less employment security, lower starting pay and stricter
work rules signal a new era for the jobs viewed as a ticket to
the middle class since Henry Ford’s $5-a-day wage in 1914. The
changes also mean GM, Chrysler Group LLC and Ford Motor Co. are
free of the obligations that helped sink the industry in 2009
and can make money with lower sales volumes.

UAW President Bob King said in June that he’ll seek to win
back benefits and rebuild the union’s power when contract
negotiations begin next year. Automakers may seek even more
concessions as sales remain close to a 30-year low.

In the meantime, autoworkers are adjusting to a new way of
life in an industry where deliveries fell to 10.4 million
vehicles in 2009, the lowest level since 1982, the year Dorey
got his driver’s license. Sales averaged 16.8 million a year
from 2000 to 2007.

Distant Transfers

Pedro Gonzales accepted a transfer in May from a GM plant
in Pontiac, Michigan, to one in Lordstown, Ohio, to avoid a long
layoff and slipping to the bottom of the list of workers to be
recalled under new union rules.

For two months, he and three other workers stayed in a
hotel and a two-bedroom apartment, where he slept on an air
mattress in the living room. On weekends, he drove more than
four hours to see his wife, mother and five children before
moving them to Ohio this month.

“The people here are nice, and the work seems stable, so I
decided to stay,” said Gonzales, 42, who assembles instrument
panels for the Chevrolet Cruze small car. “I don’t want to move
my family again.”

Rejecting Transfers

Workers previously were able to turn down transfers farther
than 50 miles from their plant and remain in the jobs bank, said
Sean McAlinden, chief economist at the Center for Automotive
Research in Ann Arbor, Michigan. There would have been 20,000
workers in the jobs bank at the start of 2010 if the program
still existed, he said.

Laid-off employees with fewer than 10 years of experience
now get partial pay for 26 weeks, while those who’ve worked
longer can get paid for as much as a year. Workers then move to
a transition support program, about equal to collecting
unemployment, for an additional 26 weeks to one year, McAlinden
said.

Wages also are declining, with new hourly production
workers starting at $14 an hour instead of $28. The combined
cuts reduced Detroit-based GM’s average labor cost to $58 an
hour from $74 two years ago, McAlinden said. The new $14-an-hour
workers, which could account for 20 percent of the labor force
eventually, will drive GM, Ford and Chrysler’s hourly costs
below the $56 for Toyota Motor Corp.’s most senior U.S. hourly
workers, he said.

‘Solidly Profitable’

GM is now positioned to break even during troughs in
demand, Chief Executive Officer Ed Whitacre, who will cede the
title to Daniel Akerson next month, said in June. Ford, based in
Dearborn, Michigan, will be “solidly profitable” in 2010, CEO
Alan Mulally has said.

Those improved prospects are setting up a fight during
contract talks in 2011. Ford, the only U.S. automaker that
didn’t file for bankruptcy or receive government assistance last
year, is seeking parity with GM and Auburn Hills, Michigan-based
Chrysler, which won a freeze on wages for new hires until 2015
and a prohibition on some strikes for five years.

The union wants automakers to restore some of the pay
raises, annual bonuses and cost-of-living adjustments it
surrendered to keep the companies afloat last year.

“It’s really important to understand and stress that all
the auto companies were profitable and successful paying the
wages and benefits they did when they had good product and
product the customer wanted,” King said in an interview at the
UAW’s Solidarity House headquarters in Detroit. He declined to
specify which benefits he’d seek in the negotiations and said he
didn’t think it was possible to get back everything the union
gave up.

Union leaders likely will be successful in clawing back
some compensation and benefits, said Bob Schulz, an auto analyst
for Standard & Poor’s.

“It’s going to raise costs, it’s just a question of how
and how much,” he said.

‘Time Warp’

Union leaders and workers looking to win back concessions
are stuck in a “time warp,” said David Littmann, senior
economist for the Mackinac Center for Public Policy, a research
organization in Midland, Michigan, that promotes free-market
principles.

“They want to make things the way they were, and they’re
not,” Littmann said.

The jobs bank, which had a combined 25,000 Ford, GM and
Chrysler workers at its peak in the early 1990s, was originally
designed to retain trained workers who were temporarily
displaced by productivity or business cycles. The program later
became a symbol of the benefits union workers received as the
U.S. government debated approving funds to save the industry.

“It became the welfare mother who drives a Cadillac,”
said Harley Shaiken, a labor professor at the University of
California-Berkeley. “It became the symbol of what was wrong
with welfare.”

The program’s stigma and the nation’s 9.5 percent
unemployment rate will make it difficult for the union to win
back some benefits, he said.

Dorey, who said he was never in the jobs bank, said he
probably will be on the second shift when production at the
Orion plant restarts next year. He’ll start work in the mid-afternoon and won’t get home until 4 a.m., leaving the divorced
father little time to spend with his 11-year-old son.

“He’s at that point where we do a lot together,” Dorey
said. “If I’m working second shift, how is that even
possible?”